The New Foreclosure Law, which permits the commencement of the procedure for the foreclosure of immovable properties, affects not only the registered owners of immovable properties but also the buyers of immovable properties who were never registered as the owners of immovable property and found themselves ‘‘enclaved’’ in the danger of foreclosure of the property they have purchased, due to loan obligations of the Property Developers.
With the intention of protecting such enclaved buyers, the parliament has voted new legislation to ensure that enclaved buyers receive their title deed and to avoid foreclosure of their immovable property.
The new legislation on the Transfer and Mortgaging of Immovable Property (Amended) (No.10) Legislation of 2015 no. 139(I) of 2015, which came into force on 7 September 2015, aims to protect buyers of immovable properties who have paid for a mortgaged property and have deposited their contract of sale at the Land Registry Office, but are not the registered owners via a separate title deed.
APPLICATION PROVISION (article 44(Κ))
On the basis of this new legislation, buyers can now apply to the Land Registry Office of the District in which their immovable property is located, for the transfer of the immovable property onto their name and the removal of any encumbrance/mortgage.
The main requirements are the following: 1) That the sales contract of the immovable property or part thereof has been filed at the Land Registry Office before the 31st of December 2014, and 2) That the purchase price has been fully paid or if the purchase price has not been fully paid then the Buyer can, for the purpose of the application, pay the remaining amount of the purchase price into a special temporary account within 30 days of the date written notice was served for this purpose by the Land Registry Office, and 3) That there is a registered title deed of the immovable property.
IMPACT OF THE PROTECTION OF ENCLAVED OWNERS
With the filing of this application, irrespective if there is a pending procedure or not, including foreclosure procedures, bankruptcy etc., any such procedure is suspended until the full examination of the application. The determining factor for the suspension of other ongoing procedures is the payment of the immovable property’s purchase price (or part thereof with a written declaration of the payment of the remaining amount), regardless as to whether there is a title deed for the actual property being purchased (assuming that the publication of a separate deed is feasible). At the next stage of the examination of the application, a title deed must be issued for the entire immovable property (time will be allowed for this) for the application to proceed.
If the application meets the relevant requirements, then at the same time the Land Registry Office will send notification to every interested party (buyers, sellers, lenders, and any other person that benefits from the encumbrances) concerning the transfer of title to the buyer’s name and as regards the cancellation/mortgage release/encumbrance/restriction. It is worth noting that instead of complete cancellation of the mortgage/encumbrance, the lender and any other person that benefits from the encumbrances is entitled to apply for the mortgage/encumbrance to be transferred to another immovable property which belongs to them or if they do not have one, to a property of their guarantor in relation to the immovable property in issue (legal or actual person). It is implied that, any person who is to benefit from such mortgage/encumbrance/restriction (i.e. lender/bank) is entitled to submit an objection within 45 days from the date of the receipt of the notification for the following reasons: 1) the contractual obligations of the buyer towards the seller were not fulfilled or 2) the contract is null and void.
The conclusion of this procedure, in the event the objection is not successful, is the acquisition of the title deed by the enclaved buyer and the removal of every encumbrance/mortgage from their immovable property.
PROCEDURE IN A NUTSHELL
The new legislation is judged to be fair as it is, undoubtedly, an important step for the protection of buyers who have paid off the agreed price or are in the process of paying it off, complying fully in this way with their contract and who have not received the separate title deed of the immovable property for reasons beyond their control.
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